Daistruk Pre-Seen Material PDF

(Source: CIMA’s Strategic Case Study, Pre-seen material)
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merits.
Contents
Introduction .................................................................................................................... 2
Logistics ......................................................................................................................... 3
Daistruk ........................................................................................................................ 11
Extracts from Daistruk’s annual report........................................................................ 14
Daistruk’s Board of Directors ...................................................................................... 15
Daistruk’s Principal Risks ........................................................................................... 17
Extract from competitor’s financial statements ........................................................... 20
Share price history ..................................................................................................... 22
News stories ................................................................................................................. 23
Introduction
Daistruk is a quoted company that offers a logistics service.
You are a senior manager in Daistruk’s finance function. You report directly to the Board and
advise on special projects and strategic matters.
Daistruk is based in Roundland, a developed country that has an active and well-regulated
stock exchange. Roundland’s currency is the R$. Roundland requires companies to prepare
their financial statements in accordance with International Financial Reporting Standards
(IFRS).
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©CIMA 2023. No reproduction without prior consent.
Logistics
Logistics is a broad term that encompasses the process of managing the flow of goods,
ensuring that they reach their intended destination on time. Logistics includes the planning,
implementation and control required to ensure the safe and efficient management of that flow
as well as the physical transportation of materials and products.
Most logistics systems involve the following:
Inbound logistics focus on the procurement of goods:

• receiving and checking goods (which may take the form of parts, materials and/or finished
products)
• storing goods (if necessary)
• updating inventory records
Internal logistics involves handling goods within the entity, excluding inbound and outbound
logistics:
• managing goods
• maintaining inventory records
Outbound logistics involves processes associated with the movement of goods to customers:
• warehouse picking
• packing
• despatch
• recording
Outbound logistics also includes reverse logistics whereby goods move from customer to the
entity. That may be due to the return of defective goods or the recycling of products or
packaging.
Each stage in the flow of goods depends upon the maintenance and communication of
accurate information. Logistics requires the effective communication of information both within
the entity and between the entity and its suppliers and customers.
The scale and complexity of logistics varies between entities, depending on their size and the
nature of their business. For example, a manufacturer such as Malttor Motors has very
different needs from a retailer such as Muddocks Supermarkets:
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Malttor Motors Malttor Motors is a global manufacturing

company that has 52 factories spread
across 31 countries.
Each factory mass produces a specific
product that may then be shipped to other
factories as required. For example, all of
Malttor’s petrol engines are manufactured
at a factory in Eastland.
• The engine factory’s inbound logistics
focus on the procurement of engine
parts and materials.
• Internal logistics manages the inventory
of parts and materials, supplying the
factory when required.
• Outbound logistics stores completed
engines, shipping them to the Malttor
factories that assemble cars.
Each of Malttor’s factories has its own
logistics system, interacting with third
parties and with other factories in the Group
as appropriate.
Malttor’s logistics are complicated by the
need to ship often heavy and expensive
components and assemblies between
factories. Malttor’s cars must then be
shipped to dealers in the many countries
where Malttor’s cars are sold.
Muddocks Supermarkets Muddocks Supermarkets is one of the
largest supermarket companies in
Roundland. It has 1,270 stores and 37
warehouses in the country.
• Inbound logistics focusses on deliveries
by food manufacturers to Muddocks’s
warehouses, each of which covers a
geographical region. Perishable goods
such as milk are delivered directly to
shops by suppliers.
• Internal logistics manages inventory at
the warehouses and shops. Muddocks
uses lorries to replenish shops with
goods from its warehouses.
• Most sales are direct to customers who
collect their own goods. Some sales are
made through the Muddocks website,
and so there is an outbound logistics
function that handles deliveries to
customers’ homes.
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Businesses spend a vast amount on logistics. The total cost incurred by Roundlandian
businesses for the year ended 31 December 2022 has been estimated at R$226.2 billion. That
total can be broken down as follows:
In country Roundlandian
↓
transportation industry
is the biggest
Inhouse or outsourced
Logistics can be managed in-house or outsourced to a contractor. Very few large organisations
manage their own logistics because it is more efficient to outsource to a specialist. It is possible
to outsource some or all elements of logistics:
1PL A first-party logistics provider is a business that manages its own logistics.
2PL A second-party logistics provider handles the transportation element of the flow of
goods, acting on the instructions of a client. The client retains responsibility for
managing its logistics.
3PL A third-party logistics provider provides a wide range of services associated with
logistics, from warehousing goods to their delivery.
4PL A fourth-party logistics provider extends the 3PL model by taking responsibility for
the strategy underlying logistics. Some 4PL providers employ external 3PL
companies to provide transportation and warehousing.
Most large businesses use some variation of the 3PL arrangement, which potentially offers a
number of advantages:
• 3PL providers offer expertise that can improve the reliability of logistics while reducing
costs.
• 3PL providers may use their own warehouses and vehicles, in which case clients need not
invest in property, plant and equipment.
• 3PL providers can offer flexibility in the event of changing needs. Clients may be able to
add or release capacity in response to changing demand.
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• 3PL providers can resolve problems affecting the flow of goods without the need to distract
clients’ management teams.
• 3PL providers can take responsibility for managing legal requirements such as licences
and safety requirements.
Those advantages may not always be realised in practice. For example, there can be seasonal
variations in demands for storage space, and so 3PL providers may not always be able to
offer flexibility at busy times of year.
Shared vs dedicated 3PL

Some clients negotiate exclusive arrangements for the use of a 3PL’s resources. These
“dedicated” arrangements grant exclusive use of specific assets belonging to the 3PL provider.
That could mean that a number of vehicles will be painted in the client’s colours and will be
used on that client’s business, or a warehouse could be set aside for the client’s exclusive
use.
Shared arrangements do not guarantee the exclusive use of assets. The 3PL provider is free
to, for example, use a vehicle to carry several part loads for different clients in one trip, or to
carry a load for one client on the outward journey between two locations and another load for
a different client on the return journey. A warehouse could also have areas set aside for
different clients within the same building.
Dedicated arrangements may be more cost-effective than shared for companies that have
high volumes of goods to transport in accordance with a regular schedule so that vehicles can
be kept full. They may also be beneficial for clients who have specialised needs such as goods
that require specialised storage or transportation arrangements.
Storage
Logistics management usually requires warehousing or
other forms of storage that permit goods to be stored
safely until they are required at the next stage of their
journey. The number, size and location of storage
facilities must be decided.
Storage sites must be large enough to provide sufficient
capacity. They must also be accessible to whatever
mode of transport will make deliveries or collections,
whether that be road, rail, sea or air. Locations can also
affect transportation costs due to distances between nodes.
Storage facilities must be configured and equipped to

handle the goods that will flow through them. For
example, goods are often carried on wooden pallets so
that they can be lifted by forklift trucks. That usually
requires warehouses to have loading docks that enable
forklifts to drive into cargo trailers when loading or
unloading. The main storage space in the warehouse
will then have to permit free and safe movement of
forklifts so that pallets can be placed in storage or
picked for despatch.
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Different types of racks can be installed to make the best possible use of available space,
taking account of the weight of a typical pallet (for instance, pallets of electronic goods will
generally be lighter than pallets of tinned foods).
Warehouses can be automated, reducing the need for staff
by using conveyor belts to move goods. It is also possible to
use robots to pick and carry goods, placing them in their
assigned storage location or preparing them for despatch.
This type of automation is frequently associated with the
fulfilment of online sales. Despatches might comprise a
single item or a small number of different products, picked from a large warehouse that stores
many different products.
Many products require specialised facilities for handling
and storage. For example, liquids require tankers and
storage tanks. Grain and other crops require their own
equipment for collection and storage.
Different types of goods can also raise safety concerns if
they are flammable or toxic and must be handled with
care. Or there may be hygiene issues with goods that are
intended for human consumption, either as food products or ingredients.
Road transport
Road vehicles account for most of the expenditure on transportation for logistical purposes:
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Road transport takes a variety of different forms:
Cars and vans Cars and vans can be an efficient means of

carrying small loads, particularly when
making multiple deliveries over the “last mile”
for an online retailer.
Drivers do not need to have special licences,
and so recruitment and retention are
simplified for employers.
Some larger vans can accommodate a pallet
and can be loaded and unloaded by forklift.
Rigid trucks Rigid trucks consist of a chassis with a cab

for the driver and a load compartment.
Manufacturers usually supply these vehicles
without a load compartment. Third- party
suppliers can then add a load space that
best meets the buyer’s needs. For example,
the load compartment could have flexible
“curtain” sides that can be opened to make it
easier to load and unload with a forklift or the
load compartment might be refrigerated.
Rigid trucks are available in a variety of
sizes. Roundlandian law permits trucks of up
to 7.5 tonnes to be driven by holders of
standard driving licences. Larger trucks
require a heavy goods vehicle licence.
18-tonne trucks are a popular size because
they are well suited to carrying pallets of
goods.
Articulated trucks Articulated trucks consist of a tractor unit
and a trailer. The tractor unit has the driver’s
cab, the engine and the fuel tanks. The
trailer carries the load.
Tractors and trailers are designed to be
interchangeable, to the extent that a trailer
can be left at a destination for loading and
the tractor can be hitched to another trailer
for the return journey.
Trailers come in a variety of different
configurations, allowing buyers to specify the
manner in which they will be loaded and
unloaded as well as the ability to specify
trailers that are suited to different types of
cargo.
Drivers must have heavy goods vehicle
licences before they can drive an articulated
truck, even if it is a bare tractor unit without a
trailer.
Some tractor units come equipped with a
sleeping compartment, which enables the
driver to park overnight and sleep in the cab.
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Rail
Rail transport offers a number of advantages over road:
• Rail transport is generally more sustainable than road
transport with lower emissions per tonne/kilometre.
• Using rail reduces congestion on the roads. It is
estimated that each trainload of goods replaces 75
articulated truckloads on the roads.
• Rail can be more reliable in terms of on-time delivery,
which can be beneficial when scheduling the movement
of goods for immediate use.
• Rail transportation is often much cheaper, particularly
for the carriage of materials in bulk.
Rail can be used to carry a range of products. Wagons
come in a variety of different configurations, including open wagons for raw materials such as
iron ore, tankers for liquids and wagons adapted for special loads, such as cars and vans.
The usefulness of rail depends largely on the location of facilities that are convenient for
loading and unloading at either end of a load’s journey.
Roundland has an extensive network of railway lines that are used for passengers and freight.
All of the country’s seaports have rail connections to their freight docks, and so it is possible
to offload ships directly onto trains. The railway lines are used by several rail operators,
enabling logistics companies to offer both rail freight and road for the transportation of goods.
Sea
It may be necessary to use sea freight simply because
there are no alternatives when goods are to be
transported to or from a distant location. For example,
Roundland imports large quantities of grain from
Northland which is on the far side of the Western
Ocean. That grain is transported to ports in Roundland
on bulk carriers. The grain is then transported by road
or rail to factories where it is used to make bread and
other products.
Bulk carriers have open holds that can carry large
quantities of goods such as grain, ore or coal. Each type of load requires specialised
equipment to allow it to be loaded and unloaded quickly and efficiently. Bulk goods are often
loaded into open-topped railway wagons at the dockside.
Liquids such as oil are carried on tanker ships. Liquids can be pumped from tankers into
storage tanks by the dockside. Those liquids can then be pumped to smaller ships or into
tankers towed by trucks or railway locomotives for onward transportation.
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Container ships carry goods in shipping containers,

which allow for rapid loading and unloading. Many ports
have container terminals that are equipped with cranes
designed to lift containers. Once unloaded, containers
can be stacked ready to reload onto another ship.
Containers can also be loaded onto trucks or trains.
Containers are standard sizes, which makes them easy
to manage.
Shipping containers can also be brought to ports on
railway wagons and trucks, making them a flexible means of transporting goods for export.
Articulated trucks can be carried on car ferries, which can allow for flexibility in making sea
crossings that are served by ferry routes. There are six major ferry ports on Roundland’s south
and east coasts, and all are used by trucks to carry freight between Roundland and foreign
destinations. Roundland is a large island that has no road or rail links to other countries.
Most 3PL logistics providers can manage the documentation associated with imports and
exports by sea, in addition to making the necessary arrangements to charter ships or to
organise the carriage of shipping containers by sea.
Air
Freight can be carried by air, either on dedicated cargo aircraft or in the holds of passenger
aircraft, alongside luggage.
Airfreight is generally suited to high-value goods that are small enough to be carried
economically. It may also be necessary to consider airfreight for the transportation of goods
that are either urgent or that are perishable. For example, fresh fruit and vegetables account
for 10% of the weight of airfreight arriving in Roundland. Some varieties must be imported
from countries with warmer climates and must be flown rather than shipped because they are
unsuitable for freezing and would not remain edible for the duration of a sea voyage.
Cargo aircraft are configured to carry only freight. They can
accommodate large items that are required urgently and so
cannot be transported by overland or by ship, or large
volumes of pallets, such as high value electronics that must
be transported quickly and securely.
It is possible to charter a cargo aircraft for a single urgent
load or for regular deliveries of an item that requires the
speed or security of airfreight.
It is also possible to book consignments of freight onto the cargo aircraft operated by the major
courier companies. Those companies have regular flights between major transport hubs in
most industrialised countries.
Most airfreight is carried in the holds of passenger aircraft.
Airlines do not require all their hold space for passenger
luggage and can generate significant additional revenue by
carrying cargo. Goods must fit onto the standard pallets used
for airfreight and clear the door to the aircraft hold.
All large airports are equipped to handle freight. It is possible
to transfer freight between aircraft on connecting flights when
there is no direct flight between a load’s origin and its final
destination.
It can be complicated to manage airfreight. Many 3PL providers work with third-party
specialists to deal with clients’ needs.
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Intermodal
Intermodal transport involves the use of two or more modes in a single journey. For example,
a shipping container might arrive at a Roundlandian port by sea, be offloaded onto a railway
wagon that carries it to a terminal at which it is loaded onto an articulated truck for delivery to
its final destination.
Intermodal transport frequently involves freight that is being carried in
shipping containers. These can be stacked on the decks of container
ships or loaded onto wagons on freight trains or trailers on articulated
trucks. The containers can also be stacked on land for storage purposes,
enabling goods to be stored without the need for warehouse space to
protect them.
Shipping containers are standardised in terms of their size and the fittings
that are used to secure them on a ship, train or truck. Those same fittings
are also compatible with the hoists used for loading and unloading at
ports and road and rail terminals. Containers can be purchased with
refrigeration, air conditioning and other systems that enable them to be
used to prolong the lives of perishable goods during transportation and storage.
Intermodal transportation can offer rapid and efficient movement of goods in comparison to
single mode transport. For example, it may be cheaper to use an articulated truck to transport
manufactured goods from a factory to the nearest rail terminal and have them complete their
journey by freight train rather than making the entire journey by road.
The intermodal transport can be made more efficient by
using inland ports. These are basically rail terminals that
are not served by a seaport. They are usually located
close to both main railway lines and motorways so that
they can act as distribution centres, offering flexibility in
the collection and onward movement of goods. They also
have storage facilities to enable goods to be offloaded and
held until they are needed.
It is often cheaper to take goods arriving by ship to an
inland port for storage or distribution. Seaports usually have good rail links, but it can be
expensive to store goods there because of restrictions on space. Similarly, goods can be
offloaded at an inland port before taking them by rail to a seaport.
Inland ports can also be used for transporting goods within the country. They can make it cost-
effective to transfer goods from road to rail, even if the railway journey is relatively short.
Daistruk
Daistruk was established in 1958 as a transport company to move building materials for the
construction of a large steelworks that was being built in its hometown. The company grew
rapidly, expanding its client base and buying additional vehicles and employing more drivers.
By 1974, it was transporting loads by road across the whole of Roundland. Daistruk was
quoted on Roundland’s stock exchange in 1978. The company now employs 22,000 people,
including 7,000 drivers.
Daistruk is now one of the largest 3PL logistics providers in Roundland. It provides intermodal
logistics management services to many large organisations including:
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Inventory Daistruk provides IT-based services to manage customers’ inventory

management and enhance efficient transport:
• Planning and optimisation of uplifts and despatches
• Data capture and analysis
• Optimisation of vehicle utilisation
• Modelling and decision making with respect to inventory holding
Clients provide Daistruk with access to relevant data held on their
enterprise resource planning (ERP) systems. Daistruk uses a
warehouse management system (WMS) to track inventory levels and
movements of goods.
Daistruk can manage elements of a client’s supply chain. Clients may
issue instructions relating to the movement of goods, or they may ask
Daistruk to monitor and manage inventory at different locations. For
example, a supermarket client might pay Daistruk to replenish shops
using goods held under Daistruk’s management and at Daistruk’s
discretion, provided the shops do not run out of products and have
space for the incoming deliveries.
Shared user Daistruk has 35 warehouses spread across Roundland. These are
storage and used to store and despatch goods. Clients are charged on the basis of
handling the storage space occupied and the length of occupancy, with
additional charges for inventory handling. Inventory handling includes
checking incoming goods, putting them into storage and collecting
them and processing them for despatch.
The warehouses have areas set aside for the storage and handling of
different types of goods, including temperature and humidity-controlled
areas for storing food and secure areas for the storage of high-value
items.
Outsourced Daistruk operates 90 warehouses belonging to clients, providing both
warehouse labour and all aspects of inventory handling.
management
Shared usage Daistruk owns 4,500 articulated tractor units and 6,500 trailers. All are
transport available for shared usage. That enables goods to be carried as part-
loads, which reduces transportation costs. It also makes it possible for
trucks to backhaul loads on the return journey, again offsetting running
costs for clients.
Shared usage reduces the number of vehicles on the roads, making
this a more sustainable means of operation.
The company’s trailer fleet includes 800 tankers that can carry liquids
or powder. 600 of those are available for the carriage of fuel and
chemicals. The remainder are for the carriage of foods, including milk
and vegetable oils.
The company has a further 1,000 smaller vehicles, including rigid
trucks and vans, to offer a flexible and efficient service.
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Rail transport Daistruk owns ten railway locomotives that

and intermodal pull loads on Roundland’s national rail
network. These operate continuously, with
each trainload carrying the equivalent of up
to 80 articulated trucks’ worth of goods.
Daistruk owns two inland ports in
Roundland, in addition to the 35
warehouses that it uses for shared storage.
The inland ports are used primarily for the short-term storage of goods
that are in shipping containers and for switching shipping containers
between trains or between rail and road transport.
Daistruk can manage the import and export of goods by sea, using
both trucks and trains for deliveries to and collections from Roundland’s
seaports. The company does not own its own ships, but it works closely
with shipping companies to organise cargo for its clients. Daistruk’s
staff can also manage the documentation and other administrative
issues associated with customs regulations. The company can make
similar arrangements for air cargo.
Specialised Daistruk offers a specialised service for
loads the transportation of oversized loads.
Clients in the construction industry often
need to move large items such as wind
turbines. These require specialised
equipment and specially trained and
licenced drivers.
Daistruk has three main categories of client:
Some customers do not fit within a single category. For example, Muddocks Supermarkets is
one of Daistruk’s largest clients in terms of revenue. Each of Muddocks’s shops sells clothes
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and household goods as well as food. Where appropriate, Daistruk will use the same truck to
deliver both food and non-food items to shops. Muddocks also sells fuel to motorists and has
filling stations at most of its shops, and so Daistruk also provides tanker services.
Daistruk’s IT systems track client inventory in real time. Clients
can access information relating to their inventory and can
instruct Daistruk to organise movements of goods. Those
instructions are sent electronically. For example, Muddocks
Supermarkets may wish five shipping containers of tinned
goods to be collected from the docks, transported to a
warehouse and unloaded by forklift. Daistruk would
acknowledge the instruction and would then ensure that
suitable vehicles were assigned to meet the ship. Drivers would be assigned to this task and
told which trucks and trailers they should use.
Daistruk’s IT systems also track the services being provided for clients. These are priced in
accordance with the nature of the support being offered. For example, inventory stored on
pallets at one of Daistruk’s warehouses will be charged at a daily rate per pallet, with additional
charges for any movements, such as unloading a trailer or a container or picking items to
make a load for despatch.
All of Daistruk’s vehicles are fitted with electronic trackers that update the transportation staff
on their locations and status at all times. Transportation staff, supported by software, can
manage loads and select the most efficient routes, which can be helpful when part loads must
be carried and offloaded. For example, Muddocks might wish to replenish six of its shops with
a variety of cleaning materials. Daistruk’s warehouse staff would receive electronic instructions
telling them which pallets to pick and the order in which they are to be loaded onto the trailer.
The truck driver would then drive from shop to shop, following a route that both minimised time
and distance and maximised the overall efficiency of each delivery.
Daistruk’s IT systems can monitor the estimated time of arrival at each location. Delays due
to traffic or weather conditions can be predicted and revised routes can be sent to the satnav
system in each truck. If a delay cannot be avoided, then the systems will send a warning to
the client.
Apart from monitoring delivery times, Daistruk must also ensure that its drivers do not exceed
their permitted hours. Roundlandian law makes it an offence for a driver to drive for more than
9 hours each day. That limit is in place to reduce the risk of drivers losing concentration or
falling asleep while driving.
Extracts from Daistruk’s annual report
Daistruk’s mission and values
Daistruk’s mission
Daistruk gets things done.
Daistruk’s vision
Daistruk’s vision is to have a positive impact on all stakeholders through the provision of
sustainable supply chain strategies and services.
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Daistruk’s core values

• Daistruk is passionate about providing excellent service.
• Daistruk delivers excellent service at all times.
• Daistruk acts with integrity in dealing with its stakeholders.
• Daistruk trusts and respects its employees and provides a safe working environment.
Daistruk’s Board of Directors

Mabalemi Maleka, Non-Executive Chair
Mabalemi had a long and successful career as a politician, including spending 2 years as a
junior minister for railways. She has now retired from politics. In addition to her position on
Daistruk’s board, she is a visiting professor of economics at Central City University.
Mabalemi joined Daistruk’s Board in 2020.
Henrik Gerding, Chief Executive Officer (CEO)

Henrik has a degree in computer science. He worked in software development with a major
IT company before joining Daistruk as a senior manager in the company’s data centre.
Henrik joined Daistruk’s Board as Chief Information Officer (CIO) in 2016. He was promoted
to Chief Executive Officer in 2020.
Doreen Sumpat, Chief Operating Officer (COO)

Doreen holds a heavy goods vehicle licence. She worked in a food warehouse after leaving
school, during which time she learned to operate forklifts. She went on to learn how to drive
articulated trucks. She joined Daistruk in 2002 as a trainee warehouse manager. She
completed a part-time MBA degree, after which she was promoted to various management
roles within the company.
Doreen joined Daistruk’s Board in 2017.
Rasim Hamid, Chief Finance Officer (CFO)

Rasim is a qualified accountant. He spent much of his career working for a leading
supermarket company, during which time he completed his professional training and worked
his way up to a senior management role in the finance function. He joined Daistruk in 2015 as
Chief Accountant and was promoted to CFO in 2019.
Andrea Lopes, Chief Information Officer (CIO)

Andrea studied data science at university. After graduating, she worked in logistics
management with a variety of manufacturing companies. She joined Daistruk in 2017 as a
senior IT manager. She was promoted to her present position on the Board in 2020, replacing
Henrik Gerding as CIO.
Max Foster, Human Resources Director

Max has significant experience of human resource management at a senior level. He was HR
Director at a major quoted construction company before joining Daistruk’s Board in 2020.
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Professor Hongyu Liu, Senior Independent Director

Hongyu had a successful career in academia, latterly as a professor of management science
at Capital City University. She joined Daistruk’s Board as an independent director in 2019,
combining that with convening the Management Committee of Capital City Hospital. She was
appointed Daistruk’s Senior Independent Director in 2021.
Khaled Abbas, Independent Non-Executive Director

Khaled has an engineering background. He spent most of his career worked for a leading
vehicle manufacturer, latterly as Director of Innovation. He retired from full-time employment
in 2018. Since then, he has combined his role on Daistruk’s Board with convening a
professional engineering body’s outreach programme to encourage school pupils to consider
a career in engineering.
Nathalie Brulat, Independent Non-Executive Director

Nathalie worked for Roundland’s Department of Transport for most of her career. She had
reached a senior position by the time of her retirement. She was involved in drafting legislation
on a variety of issues, including revisions to motorway speed limits and updating the tests
required for driving licences. Nathalie joined Daistruk’s Board when she retired from
government service in 2021.
Directors’ responsibilities
Henrik Gerding
Chief Executive Officer
Doreen Sumpat Rasim Hamid Andrea Lopes Max Foster
Chief Operating Chief Finance Chief Information Human Resources
Officer Officer Officer Director
• Transportation • Financial • IT operations • Recruitment and
• Liaison with reporting • IT security selection
clients • Management • Software • Staff retention
• Warehouse accounting maintenance • Health and
operations • Treasury and Safety
development
Board committees
Audit Risk Remuneration Nomination
Mabalemi Maleka
Non-Executive Chair ♦ ♦ ♦
Professor Hongyu Liu
Senior Independent Director ♦ ♦ ♦
Khaled Abbas
Independent Non-Executive Director ♦ ♦ ♦
Nathalie Brulat
Independent Non-Executive Director ♦ ♦ ♦
Daistruk’s Chief Internal Auditor reports to the convener of the Audit Committee.
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Daistruk’s Principal Risks

Risk impact Risk mitigation
Concerns about the consumption of fossil Daistruk has been proactive in setting
fuels have caused both statutory and targets for reductions in its carbon
reputational risks for companies that rely emissions.
heavily on the movement of goods by road
The company has actively pursued the use
and rail freight.
of new technologies to reduce emissions.
The Roundlandian government is aiming for
the country to achieve net-zero carbon
emissions by 2052.
Daistruk’s activities create significant health All staff receive health and safety training
and safety risks. Handling goods and during their induction. Ongoing training is
operating delivery vehicles can put provided.
employees and others at serious risk of
Daistruk has detailed procedures in place to
injury.
minimise the risks of injury and damage to
Daistruk’s operations can also risk damage property. Those procedures include the
to property belonging to third parties, need for specific training relating to tasks
including clients’ goods, premises and and the operation of equipment.
vehicles.
Detailed records are maintained about all
events that have caused injury or damage
or that had the potential to do so.
Clients depend on Daistruk for the prompt Daistruk has comprehensive IT systems
and reliable movement of goods. Any that manage the movement of goods and
failure to meet schedules is both visible and that can predict any delays and alert
potentially damaging to business transportation management staff so that
relationships. action can be taken and clients can be kept
informed.
Daistruk relies heavily on its IT systems to Daistruk’s IT managers are vigilant with
ensure that all movements of goods are regard to monitoring potential threats and
planned and executed on time and as responding accordingly.
efficiently as possible. The company’s IT
All systems, including security software, are
systems are potentially vulnerable to attack
kept up to date at all times.
or downtime due to problems with hardware
or software. The threat of emerging vulnerabilities is
evaluated, seeking advice and conducting
penetration tests where appropriate.
Daistruk relies heavily on its ability to recruit The Board pays close attention to rates of
and retain employees to fill key roles, staff turnover and responds to any threats.
including drivers with the heavy goods Daistruk ensures that staff pay is
vehicle licences that are required to drive competitive with respect to the rest of the
articulated trucks. industry.
17
Daistruk Group
Consolidated statement of profit or loss
for the year ended 31 December
2022 2021
R$ million R$ million
Revenue 1,989 1,810
Operating costs (1,850) (1,701)
Operating profit 139 109
Finance costs (14) (13)
125 96
Tax expense (15) (12)
Profit for the year 110 84
Daistruk Group
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share Retained
capital earnings Total
R$ million R$ million R$ million
Opening balance 100 310 410
Profit for year 110 110
Dividend (92) (92)
Closing balance 100 328 428
18
Daistruk Group
Consolidated statement of financial position
as at 31 December
2022 2021
Assets
Non-current assets
Property, plant and
equipment 530 511
Goodwill 91 91
621 602
Current assets
Inventory 3 2
Trade receivables 290 257
Bank 32 28
325 287
Total assets 946 889
Equity
Share capital 100 100
Retained earnings 328 310
428 410
Liabilities
Non-current liabilities
Borrowings 280 260
Current liabilities
Trade payables 224 206
Tax liability 14 13
238 219
Total equity and liabilities 946 889
19
Extract from competitor’s financial statements

Daistruk is one of the largest 3PL logistics providers in Roundland. Its biggest competitor is
Carree, which provides a similar range of services to Daistruk’s, including a full intermodal
service.
The logistics industry is very competitive. Most large entities have outsourced this function
already. The volume of available business depends on the level of economic activity.
Carree Group
Consolidated statement of profit or loss
for the year ended 31 December
2022 2021
Revenue 2,347 2,154
Operating costs (2,128) (1,939)
Operating profit 219 215
Finance costs (12) (12)
207 203
Tax expense (25) (24)
Profit for the year 182 179
Carree Group
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share Retained
capital earnings Total
R$ million R$ million R$ million
Opening balance 300 105 405
Profit for year 182 182
Dividend (155) (155)
Closing balance 300 132 432
20
Carree Group
Consolidated statement of financial position
as at 31 December
2022 2021
Assets
Non-current assets
Property, plant and
equipment 592 570

Goodwill 100 100
692 670
Current assets
Inventory 4 3
Trade receivables 329 280
Bank 36 32
369 315
Total assets 1,061 985
Equity
Share capital 300 300
Retained earnings 132 105
432 405
Liabilities
Non-current liabilities
Borrowings 300 300
Current liabilities
Trade payables 305 258
Tax liability 24 22
329 280
Total equity and liabilities 1,061 985
21
Share price history
Daistruk’s beta is 1.27.
22
News stories
Happy Comic
Readers’ questions
Question: I see lots of trucks carrying shipping
containers. How do they transport goods that can’t be
carried in a big metal box?
Anita, age 11
Answer: Shipping containers have standard dimensions
that makes them easy to stack on the decks of cargo
ships. Being a standard size also makes it easy to carry
them on trailers towed by articulated trucks and on railway wagons. Containerloads of
goods can be transported all over the world, getting transferred between ships, trains and
trucks without having to be unloaded until they reach their destination.
Most containers are just metal boxes, which are ideal for carrying a huge range of goods
ranging from mobile phones to fruit. It is, however, possible to create containers for other
purposes. For example, there are containers that open at the top which makes them ideal
for loading and unloading bulk products such as wheat and grain. Containers can also be
supplied as tanks for carrying liquid or gas. Those are built into a frame that lets them
stack with standard metal containers and they also fit on the same trailers and wagons as
standard containers.
23
Happy Comic
Question: Why do some trucks have big curtains along
the side? Wouldn’t metal be a lot stronger?
Rocco, age 12
Answer: Some trucks and some shipping containers are
designed to open at the side. In fact, they are called
“curtain sides”. The side openings make it easier to load
and unload them using forklift trucks. That can be very convenient if goods at the front of
the container have to be unloaded first.
The curtains are made out of very strong material, so they don’t tear easily. Also, the
cargo is secured to the floor, so the load doesn’t lean against the curtain.
You might not have noticed, but some trucks have curtain tops. The sides are solid, but
the roof is a sliding curtain that can be opened and closed. That can be very convenient
when loading loose goods such as coal, which can be poured in once the top has been
slid open.
24
Happy Comic
Question: My Dad operates a forklift at South City Port, but he
doesn’t have a licence to drive a car. Is he breaking the law?
Asim, age 11
Answer: The good news is that there is no need to have a car licence
in order to operate a forklift truck. Forklift drivers do, however, need to
have completed a formal training programme. That is important
because forklifts can be difficult to drive. Loads can make a forklift very
unstable if the forks are lifted too high. They can also block the driver’s
view of anything (or anyone) in the road ahead.
25
Roundland Telegraph
Roundland’s first fully automated container terminal
Daistruk, the major logistics company, has just
completed the modernisation of both of its inland
ports.
Both ports have now been fully automated by the
purchase of 40 Vivibon 3000 straddle carriers, all
of which are fully automated. Software and
sensors enable these carriers to operate without a
driver. They can load and unload both trucks and
railway wagons, carrying fully-laden shipping
containers to their desired location, either transferring them from one vehicle to another or
stacking them up to four units high for temporary storage.
A spokesperson for Daistruk commented that the modernisation meant that the company
could carry even more goods by rail instead of by road. The automation improves
reliability because the company will be less vulnerable to shortages of skilled crane
drivers.
26
Roundland Daily
Motorway chaos disrupts holiday travel
Three trucks carrying oversized loads created a massive
holdup on the M12 Motorway, delaying holidaymakers
who were attempting to catch flights from Central City
Airport which is located by the M12.
The trucks in question belong to Daistruk, the logistics
company. A spokesperson told the Roundland Daily that
the vehicles had been scheduled to leave at 4.00 that
morning, but a mechanical problem with one of the
vehicles had delayed departure by 2 hours. That meant
that the trucks and their escorts were passing the airport
during the morning rush hour, holding up traffic in the
process. The size of the loads meant that the trucks
occupied two lanes of the motorway, leaving only a single
lane for
motorists trying to get to the airport and beyond, which caused substantial tailbacks
of traffic. The large loads also meant that the trucks were restricted to 40 kilometres
per hour.
There are very strict rules concerning the carriage of oversized loads on public roads.
These include the need for drivers to be accompanied by attendants in the cabs of
their trucks, vehicles to be fitted with marker boards and additional lighting and the
provision of escort vehicles to prevent road users from getting too close to the load.
There are also strict rules on the maximum size and weight that can be carried.
Central City Police confirmed that they had been notified of the load. Daistruk had
complied with all applicable regulations. No accidents had been reported.

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(Source: CIMA’s Strategic Case Study, Pre-seen material)

Inbound logistics focus on the procurement of goods:

Malttor Motors Malttor Motors is a global manufacturing

Shared vs dedicated 3PL

Storage facilities must be configured and equipped to

Cars and vans Cars and vans can be an efficient means of

Rigid trucks Rigid trucks consist of a chassis with a cab

Container ships carry goods in shipping containers,

Inventory Daistruk provides IT-based services to manage customers’ inventory

Rail transport Daistruk owns ten railway locomotives that

Daistruk has three main categories of client:

Extracts from Daistruk’s annual report

Daistruk’s mission and values

Daistruk’s core values

Daistruk’s Board of Directors

Henrik Gerding, Chief Executive Officer (CEO)

Doreen Sumpat, Chief Operating Officer (COO)

Rasim Hamid, Chief Finance Officer (CFO)

Andrea Lopes, Chief Information Officer (CIO)

Max Foster, Human Resources Director

Professor Hongyu Liu, Senior Independent Director

Khaled Abbas, Independent Non-Executive Director

Nathalie Brulat, Independent Non-Executive Director

Daistruk’s Principal Risks

Total assets 946 889

Total equity and liabilities 946 889

Extract from competitor’s financial statements

equipment 592 570

Total assets 1,061 985

Total equity and liabilities 1,061 985

Share price history

Daistruk’s beta is 1.27.

©CIMA 2023. No reproduction without prior consent.

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